Fifty-year gilts to be issued

The chancellor confirmed plans to launch an ultra-long gilt, up to 50 years, as a sign of confidence in the long-term stability of the British economy. Traditionally, the longest UK debt instrument has been pegged at 30 years.

"It is because we have entrenched stability for the longer term that I can announce that, from May, we will now issue long-term bonds with maturities ... of up to 50 years," he said.

The Association of British Insurers welcomed the move. Peter Montagnon, director of investment affairs, said: "There is a substantial underlying demand for these products. Ultra-long bonds are structurally right; they reduce risk for investors who otherwise must choose between mismatching their liabilities or accepting low investment returns, while providing the prospect for the government of securing very long-dated finance at attractive rates of funding."

However, Jeremy Toner, of Investec Global Bond Fund, called it a "sideshow". He said: "Investors face the risk of capital losses unless the bonds are priced with the potential for higher future inflation." He said undated UK war bonds issued prior to the first world war and reissued in 1932, when inflation was also very low, saw major capital losses.